—Guide

What to decide before you register your company in India?

Before registering a company in India, founders should make nine key decisions: choose the right entity type, finalize the founder shareholding and ESOP.

Think Filing Team22 September 2026 6 min read

MCA has spent five years compressing what used to be a dozen separate filings into one integrated form on the MCA V3 portal. What actually determines whether your first year runs smoothly is a set of decisions you make before you open that form, several of which are expensive or impossible to reverse once you’ve filed.

There’s overall 9 decisions to make before you register a company in India.

1. Which entity type and why “Pvt Ltd by default” is often wrong

Private Limited is the reflexive choice for anyone who’s read a startup blog, but it’s not automatically right. If you’re a solo founder with no plans to raise external capital or issue ESOPs, a One Person Company gives you limited liability with a lighter compliance load. If you’re building a services business with a partner and no fundraising ambitions, an LLP avoids a chunk of the annual ROC filing burden that a Pvt Ltd carries regardless of revenue. Pvt Ltd earns its reputation specifically when you plan to raise institutional money or issue options, most investors won’t put a term sheet in front of anything else, and ESOP pools are structurally awkward outside a company. Decide based on your 18-month plan, not on what’s easiest to explain to your parents.

2. Your cap table, before it’s a cap table

The shareholding split you enter at incorporation is not a rough draft. Changing it later means share transfers, valuation questions, and stamp duty. Decide, before you file:

Who is a subscriber to the Memorandum vs. just a director
What the founder split actually is
Whether you’re reserving an ESOP pool from day one and whether any equity should vest rather than be issued outright.
Every person you name as a director or subscriber will also need a Digital Signature Certificate and a Director Identification Number before Part B of SPICe+ can be filed. Get these sorted in parallel with the cap table conversation, not after.

3. Registered office and state

A home address or a virtual office is fine at this stage for most business types. You don’t need commercial real estate to incorporate. What does vary by state is stamp duty on your authorized capital (the MCA V3 portal calculates it automatically once you pick a state, but it’s worth knowing this varies before you’re surprised by it) and which state-specific registrations attach automatically (Maharashtra, Karnataka, and West Bengal), for instance, bundle Professional Tax registration into SPICe+ itself for new companies incorporated there.

4. Authorized capital: don’t round up out of ambition

Authorized capital above ₹15 lakh loses you the zero-filing-fee concession MCA offers below that threshold, and every rupee of it factors into your stamp duty calculation. There’s no reason to authorize ₹50 lakh in capital on day one because it “sounds more serious”. You can increase it later when you actually need to issue more shares.

5. GST — register at incorporation or wait for the threshold

GST registration becomes mandatory once your turnover crosses ₹40 lakh for goods or ₹20 lakh for services in most states, with special-category states in the North East and hill states sitting at a lower threshold but several categories must register regardless of turnover, including e-commerce sellers and businesses receiving payments under reverse charge. For an early SaaS company, this is really a decision about input tax credit and whether your first enterprise clients require GST-compliant invoicing, not just a legal trigger.

6. DPIIT Startup recognition

The eligibility framework changed materially in February 2026: your entity now needs to be under 10 years old with turnover below ₹200 crore to qualify, and if you’re working in a genuinely deep-tech category (semiconductors, biotech, AI infrastructure, space tech), that extends to a 20-year window and a ₹300 crore turnover cap, with an explicit exemption from prior turnover and experience criteria for eligible manufacturing-sector startups.

Recognition itself is free and processed through the National Single Window System, typically in under two weeks. It’s worth applying for right after incorporation rather than treating it as a someday task, because it gates the 80-IAC tax holiday and angel-tax exemption, both of which matter more the earlier you claim them.

Learn more about DPIIT Startup recognition.

7. MSME / Udyam registration

The classification thresholds were revised in the 2025 Union Budget: a micro-enterprise can now have up to ₹2.5 crore in investment and ₹10 crore in turnover, small enterprises up to ₹25 crore / ₹100 crore, and medium up to ₹125 crore / ₹500 crore. That pulls a lot of pre-Series-A SaaS companies into “micro” status without anyone realizing it. Registering is free and takes minutes on the official Udyam portal, worth doing if you’ll rely on collateral-free credit guarantees, GeM government procurement, or the 45-day payment protection against larger clients; low-priority otherwise.

Learn more about Udyam Registration.

8. What happens in the 30/180 days after your Certificate of Incorporation

Within 30 days you need your first board meeting and a statutory auditor appointment. Within 180 days you must file INC-20A (Declaration of Commencement of Business). If you miss it, you can’t legally start operating or borrowing.

None of this shows up on the incorporation certificate itself; budget the calendar and the professional fees for it before you file, not after the first ROC notice.

9. If any founder or investor isn’t a resident Indian

At least one director on the board must have been resident in India for 120+ days in the preceding financial year, this is a hard requirement, not a preference. Foreign shareholding needs to be reported on the RBI’s FIRMS portal within 30 days of share allotment, and certain sectors require prior government approval for FDI. If this applies to you, get a CA or CS involved before incorporation, not after the first funding round lands.

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